16th december Gold Trend Analysis

In last nights website update resistance was listed at 1595-1608 and the high so far is 1600. Support was listed at 1552-1563 and the low so far is 1575.


Long 1/2 position (1 mini contract Average) Gold basis Feb at 1612 Ave
Intra Day stop same as website listed last night.


London Gold Fix $1,589.50 -$.50

The gold market could have been undermined this morning by comments from the IMF head who suggested that the EU crisis was escalating and that without outside help the EU troubles could prompt a global recession similar to the 1930’s. However, the markets haven’t initially taken those warnings as a sign of more trouble for the Euro zone and that is somewhat surprising. On the other hand, it is possible that outside help is being orchestrated, as evidenced by Russian promises earlier this week of a possible capital infusion into the IMF. Other countries potentially lining up to support the IMF are Sweden and the Netherlands.

The gold market might also be garnering some support from the recovery in Asian equity markets, which recently have been down for the count. With the only scheduled US data point today coming in the form of the US CPI report, it is possible that the macro economic outlook toward the US won’t be markedly changed. After the very sharp slide in gold prices this week, it is possible that a measure of short covering might be seen, especially if the gold trade thinks that bear conditions are being temporarily reversed. In fact, positive Asian equity market action and some positive analyst commentary toward gold overnight would seem to contribute further to the initial bullish tilt today.

Given the lower bullish sentiment earlier this week, the gold bulls might need to see very positive US equity market action sustained and perhaps even extended and they might also need to see even more supportive action from the dollar markets as the US DOLLAR CONTINUES TO HOLD UP AND HAS GENERATED buy signals on a daily and weekly basis over the past few weeks. A close above the 80 level today will keep the trend up. Seasonals favor the USD into January.

Equity markets in Asia were higher today after a string of losses recently. Stocks in Europe also showed some minor strength to start the Friday trade. US markets are open with gains just under the obligatory 100 point open. The US Dollar is mostly unchanged against most of the major’s to start this morning.

In the overnight action, the markets saw signs that large Japanese banks performance was holding together and that the Euro zone was able to post a trade surplus for October. The German upper house also reportedly passed its 2012 budget. Major US economic data to be released this morning is limited to the monthly CPI report, which is expected to show a minimal gain, or an unchanged reading.

Going to the Chart

Today’s chart shows this weeks drop in gold prices. There is a small uptrend channel forming since the lows and as you can see it has reached the first resistance area where price meets the downtrend channel at the 1600 area. As discussed last night, we might be in for a bounce into early next week as there was a buttonwood minor turn date on the 15th and that might be prompting this push into early next week. RESISTANCE remains the channel line and then the 23% retrace of this weeks drop at 1606. Gold is trying to recapture the 1600 area for the weekly close, but that remains to be seen. In summary, so far this is just a bounce and the overall downtrend is still in place. MONTHLY charts from our web updates earlier this week emphasized how important the 1552-1566 area was and the low at 1560 held the week. We are not out of the woods yet in gold as the MEDIA is taking every chance it can to browbeat gold. With holiday’s approaching the volume is going to really drift off until after the new year so next week will probably be another tricky week. Watch the 1585 area as support. It would be good if gold could remain above that new mini uptrend channel into the close. If I decide to exit the short term trade, I’ll email.



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"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."